There is no arguing with the power of the "green" designation in home building these days, and it is likely to grow more powerful as the 2008 U.S. presidential candidates slog through the slough of election season and oil prices soar while the economy slows. There are several ways to brand a home as energy efficient and environmentally sound, including participation in the EPA's Energy Star program and the NAHB's PATH collaboration with the government.

Bill Gloede But the pool of young, affluent buyers that is still in the market for new homes is not easily sold. For this reason, there is a strong likelihood that the Leadership in Energy and Environmental Design (LEED) designation from the U.S. Green Building Council (USGBC) will trump the others–and not only because it is a higher standard. To naturally cynical Gen-Xers, it also appears more legitimate because it requires third-party certification by specially trained inspectors.

Big builders have mostly kept LEED at arm's length to date, save for two or three divisions dabbling in pilot projects. This is probably with good reason; the LEED program is owned by USGBC, which is a private organization started by two guys who have nothing to do with the building business. Still, it has "street cred."

Paying the Piper

The good news is that LEED certification need not be prohibitively expensive, according to both USGBC and a pair of industry execs who work with the LEED program. "I could say that it is going to cost you 20 percent or 30 percent more [to build to LEED standards]," says Paul Vrabel, director of energy efficient products for Seagull Lighting, who used to run Energy Star's lighting program. "But I prefer to look at the cost as it is rolled up into a mortgage. How much is the homeowner going to save over time?"

Actually, that 20–30 percent cost differential involves building to the highest of LEED standards. There are four levels of LEED certification: simple certification, silver, gold, and platinum, with gold and platinum usually involving exotic technologies that are not yet necessarily proven to be cost effective.

[LEED BY EXAMPLE: Shown here, the LEED score card for urban, multifamily project Morrisania Homes, which received 62 out of 108 points. Jay Hall, an Annapolis, Md.-based consultant and acting director of the LEED for Homes program, says the costs associated with getting a home certified can be as low as $200 per unit. And once a builder is up and running with LEED, a sampling program that surveys one out of every seven new houses can be implemented.

Construction costs, according to Hall, are higher, but not as high as one might expect. "What we are hearing loosely is it's about a 3–5 percent increase in the sticker price of the home," he says.

For that differential, the builder gets the right to slap a label on the home, hang a plaque in the sales center, and fly banners over the development. The builder must also have its "own quality assurance in-house" in order to qualify for the sampling program, which can help with quality control overall and be used as another selling point.

The LEED for Homes program evaluates five separate areas, each involving a system of points toward certification and silver, gold, or platinum status, that range from energy systems to interior air quality to environmental sustainability.

Joe Perryman, a cost consultant with Tampa, Fla.-based Donnell Consultants who has been involved in the building of numerous LEED certified public and commercial buildings, says the planning process for certification "involves a menu of items–I think there are 69–to choose from." He notes that the points are not weighted; a builder will get the same points for an exotic and expensive rainwater collection system or photovoltaic power plant as another builder who installs a neighborhood bicycle rack or a bus stop.

Perryman's advice to home builders who are considering LEED is:

"Be as smart as you can about what it costs for each point, and seek out the points that have minimum disruption to construction and, obviously, cost."